9911796707
TMI Blog2024 (10) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... y money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the AO satisfactory. As is not disputed about the source of money wherein the revenue contended that the same whatsapp chat suggest part of the money reflected in the books and part not. Thus, the source of addition made is explained by the assessee and ld. AO has taken a plausible view on the matter. Not only that the amount of addition is disputed and as supported by the seized material it is merely mathematical calculation which is disputed by the assessee and therefore, the case of the assessee is squarely covered by the decision of our High Court in the case of Manna Trust [ 2022 (1) TMI 693 - RAJASTHAN HIGH COURT ] Not only that as regard the chargeability of disclosed income the Gujarat High Court in the case of PCIT Vs. Dharti Estate [ 2024 (1) TMI 1197 - GUJARAT HIGH COURT ] h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under the Act. We also note that it was not the case of the revenue on the variation in stock was found, variation in the investment in the assets, no loan taken or given out of books were found and no proof of unaccounted purchase were found. Thus, merely on sum slip found in the whatsapp, addition were made and that cannot be considered as unexplained credit in the hands of the assessee company. It is not a cash of revenue that ld. AO was not aware about the provision of section 115BBE, AO was conscious about the provision of section 115BBE of the Act, because while dealing with the addition of unaccounted cash found for an amount was added and while doing so he invoked the provision of section 115BBE of the Act while dealing with the subsequent year case. Here also while invoking the provision of section 263 there is no variation was proposed in the computation of income of the assessee, but only for rate of tax and that with the facts already on record being disputed and not crystallized the order is neither erroneous nor prejudicial to the interest of the revenue. Not only that as argued by assessee their case is also covered with the decision of M. P. High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls are almost identical on facts and are almost common, except the difference in figure disputed in each year, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 922/JP/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in dispute other cases. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 922/JP/2024 is taken as a lead case. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 922/JP/2024 on the following grounds; 1. That in law and in the facts and circumstances of the case, the ld. Principal Commissioner of Income-tax grossly erred in initiating passing an order u/s 263 of the Act and in holding that the assessment order passed by the ld. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment carrying the orders passed u/s. 263 got merged in a single email and the computer operator of the assessee's Chartered Accountant due to oversight could not understand that there are two different emails and took the printout of the subsequent order received for assessment year 2019-2020 only and handed over to the assessee's Chartered Accountant for further action. Copy of screen shots are as under: 5. The thereafter assuming that order dated 22.03.2024 has been passed by the ld. PCIT for the assessment years 2019-2020, the assessee asked Shri Siddharth Ranka to file appeal before the Hon'ble ITAT, Jaipur Bench, Jaipur. Accordingly appeal for A.Y. 2019-2020 was filed and the same was heard by the Hon'ble Bench and the order is reserved. 6. That recently the assessee received notices u/s. 142(1) r.w.s. 263 dated 25.06.2024 from the ld. ACIT, Central Circle, Kota for A.Y. 2018-2019 2019-2020 in reference to orders passed by the ld. PCIT. At that time the assessee applicant closely checked the email income-tax portal and got to know that 2 notices dated 12.03.2024 were issued by the ld. PCIT for A.Y. 2018-2019 2019-2020 and 2 orders dated 22.03.2024 were passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e covered u/s 132 of the Act. Cash, Jewellery and other documents were found and seized from some person s residence and business premises. The case of the assessee was also covered under search proceedings. The assessee filed return of income u/s 139 on 12.09.2018. The assessee also filed return in response to notice u/s. 153A dated 22.01.2021 declaring total income at Rs. 68,18,660/-. There is no difference between ITR filed u/s. 153A and 139 of the Act. Consequently, the case was taken up for scrutiny for A.Ys 2018-19. In the assessment proceeding ld. AO noted that during search operation mobile [iphone] phone was taken in custody and some business related charts were identified in the mobile phone of Shri Jitendra Sadhwani. Print out of total 28 pages of WhatsApp chats of plywood products to various parties by M/s. Sadhwani Wood Products Private Limited. Some payments are in cheque, some partly in cash and cheque and some payments were received in cash only. These transactions were asked to be verified to Shri Jitendra Sadhwani with supporting documents. In reply there to he confirmed that all screenshots of charts impounded as exhibit-2 were belongs to his personal mobile data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. During post search investigation, various other transactions of similar type are also found not recorded in the books of accounts. On the ground of the analysis of incriminating document / material seized / impunded at the time of search / survey proceeding conducted on 01.08.2019 the assessee has also accepted about cash component involved in these transactions as unaccounted in this regard. In the light of the evidences, gathered at the time of search / survey proceedings as well as during the post search investigation it has established that the assessee concern is engaged in making unaccounted cash sales which come to Rs. 141,80,82,030/- the year wise bifurcation determined by the ld. AO is as under Sr. No. F.Y Unaccounted cash receipts on account of unaccounted 1 2012-13 12,79,50,140 2 2013-14 14,32,00,134 3 2014-15 17,22,13,989 4 2015-16 21,95,85,706 5 2016-17 21,24,51,359 6 2017-18 22,40,32,276 7 2018-19 23,38,84,911 8 2019-20 (Till 31.07.2019) 8,47,63,515 1,41,80,82,030/- Considering the above working addition of Rs. 22,40,32,276/- was added in the total income of the assessee as unaccounted cash sales. Ld. AO also made an disallowance of Rs. 9,41,075/- u/s. 40A(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which is legally correct, the assessment order cannot be said to be erroneous but the action now initiated is just a change of opinion. v) The Reliance has also been placed by the assessee on the following decision PCIT v/s Manna Trust 2022 Rajasthan High Court PCIT v/s Dharti Estate 2024 Gujarat high court And many other orders of the ITAT The ld. PCIT considered all the facts and circumstances as detailed in the reply filed by the assessee but not found the reply convincing and thereby ld. PCIT thus held as under:- 7. I have examined the facts on record and have considered the position of law. The submission of the assessee has been perused carefully it is observed that the AR of the assessee has in the submission tried to establish that the Assessment order passed by the Assessing Officer is not erroneous but the action now initiated is just a change of opinion hence cannot be subject to the revision u/s 263 of the Income Tax Act, 1961. In this respect, the intent of the legislature behind the section has to be understood. Section 263 of the Income Tax Act, 1961, stands as a custodian, guarding the integrity of the tax assessment process in India. Its origin can be traced ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the issue of Surrender made on account of excess stock. The Honourable bench of the Rajasathan High Court had upheld the decision of the ITAT. Some of the important facts and observations arising from the judgement of Hon'ble ITAT as reproduced in the judgement Principal Commissioner of Income-tax v. Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) are as under:- (i) The first attempt of the assessing authority, give opportunity to the assessee to establish nexus between unexplained investment the regular source of income and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. (ii) In a cases where source of investment/expenditure is clearly identifiable AND Alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure both above conditions should be met simultaneously together ON failure it should be considered to be taxed u/s 69 on the premises that such excess investment is not recorded in the books of account. Further reliance is placed on the decision of Hon'ble Supreme Court in the case of Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h unexplained money as business income the assessee should have explained the complete chain of events, for generation of the unexplained money. Such nexus has not been given by the assessee. Thus it is clear that the assessing officer erred did not take a conscious decision while taxing the unexplained money generated through cash sales made out of books as business income. Clearly, this error has caused prejudice to Revenue. Being a search/seizure case, it was essential that clarification/explanation of the addition made on account of unexplained money of Rs. 22,10,32,276/- u/s 69A of the Act should have been examined by the Assessing Officer. The tax implication of the same has also not been examined or considered while making the assessment by the AO. 8. Considering all the facts and circumstances of the case and for the reasons discussed above, the assessment order dated 29.09.2021 for A.Y. 2018-19 passed by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying the applicable sections of the Act. The AO has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2018-2019 has made an addition of Rs. 22,40,32,276/- towards unaccounted cash sales as business income of the assessee appellant. The said assessment order has been passed after seeking approval of ld. Additional Commissioner of Income-tax, Central Range, Udaipur u/s. 153D of the Act. The assessee appellant has filed an appeal before the Hon ble CIT(A) for the illegal addition made by the ld. Assessing Officer and the said appeal is currently pending. 5.1. The ld. Assessing Officer vide its assessment order dated 29.09.2021 passed for A.Y. 2019-2020 has made an addition of Rs. 23,38,84,911/- towards unaccounted cash sales as business income of the assessee appellant. The said assessment order has been passed after seeking approval of ld. Additional Commissioner of Income-tax, Central Range, Udaipur u/s. 153D of the Act. The assessee appellant has filed an appeal before the Hon ble CIT(A) for the illegal addition made by the ld. Assessing Officer and the said appeal is currently pending. 5.2. The ld. Assessing Officer vide its assessment order dated 29.09.2021 passed for A.Y. 2020-2021 has made an addition of Rs. 8,47,63,515/- towards unaccounted cash sales as business income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived in the particular transaction was determined by the search team during the search action and a ratio of suppression of sales was established by using weighted average method. A ratio of unaccounted sales of 52.1675782% comes on the ground of this method that is M/s Sadhwani Wood Products Pvt. Ltd's unaccounted sale of current year and last 6 financial years and same has not been recorded in its books of accounts. The final amount was calculated at Rs. 141,80,82,030 for F.Y. 2012-13 to 31.07.2019 on the basis of evidences gathered as per table at page no. 6 of the statement. It has become crystal clear that the assessee concern M/s Sadhwani wood products Pvt. Ltd. is in practice of making unaccounted sale specially cash sale or cash component involved in the transaction has not been recorded by the assessee concern in their books of accounts. At the time of the search as well as during post search proceedings, the assessee has been given various opportunities even in the presence of accountant as well as all books of accounts maintained by the assessee and even access to the software used by the assessee for this purpose; were also present to verify their business transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found, nor was any addition made on that account. during the course of search, which comprises of total 16 individual members, i.e., 4 male adult members, 4 female adult members (married), 2 female adult members (divorcee), 4 female minor members and 2 male minor members the total jewellery including silver articles was found to the tune of 3,319 grams only which's market value at that time was equivalent to Rs. 1,11,46,377/- and out of which jewellery worth Rs. NIL was seized by the income tax department. Further during the course of assessment proceedings, the said jewellery ornaments found was duly explained in the hands of various persons and no addition was made by the Id. Assessing Officer. during the course of search total stock-in-hand as found recorded in the books of accounts of the assessee was of Rs. 8,63,80,961/- whereas the value of stock-in-hand found by the search officials from all the premises of the assessee Rs. 8,61,62,273/-, which is a nominal variation of Rs. 2,18,688/-, which is equivalent to 0.25% of stock recorded. Furthermore during the course of assessment proceedings, the Id. Assessing Officer was satisfied and no addition was made by the Id. Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 4,17,627/- and taxed the same u/s. 69A r.w.s. 115BBE of the Act. Relevant extracts of letter dated 17.09.2021 filed by the assessee is also reproduced as hereunder: 12. That thus out of Rs. 38,69,500/- found by the search officials a sum of (Rs. 7,15,128/-, Rs. 1,54,372/- Rs. 35,187/- + Rs. 1257/- + Rs. 1,32,821/-) totalling Rs. 10,38,765/- and (Rs. 23,19,935/- Rs. 3,00,200/-) totalling Rs. 26,20,135/- gross totalling (1038765 + 2620135 = 36,58,900/-) should be deemed to be fully explained and no adverse view should be adopted towards the same. 13. That the cash-in-hand which was found excessive should be subjected to normal business profit and not u/s. 115BBE of the Act and we wish to rely upon the following authorities: Hon ble ITAT, Jodhpur Bench in case of Lovish Singhal v. ITO in ITA No. 142- 146/Jodh/2018 dated 23.05.2018 has held: I have heard the rival contentions and record perused. I have also carefully gone through the orders of the authorities below. I have also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld AR during the course of hearing before the ITAT in the context of fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be taxable under section 115BBE read with section 69A of the Act or it was to be taxed as a regular business receipt - HELD THAT:- To decide this issue, it is important first to visit the statement of the director of the assessee which was recorded during the course of survey. We have particularly gone through the answer to question No. 35 wherein the director of the assessee has clearly stated that the figures noted in the diary represented sales unrecorded in the books of account and these figures related to the period April 2015 to August 2015. In the present case, the addition under section 69A could have been made only if no explanation, regarding source of such income, was offered or the explanation offered by the assessee was not satisfactory in the opinion of the Assessing Officer. In the present case, as we have already noted that the assessee had given complete explanation regarding the source of entries recorded in the diary, which were explained to be part of unrecorded sales and the Assessing Officer also did not object to the said explanation. Therefore, addition cannot be made under section 69A of the Act and if the addition cannot be made under section 69A, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cifically held that the income being added by him towards unaccounted cash sales is being added as business income. If the income has been consciously added as business income, then there is no scope for invoking the same as income from other source and in turn invoke provisions of section 115BBE of the Act. 15. The ld. Assessing Officer was undertaking assessment proceedings of the assessee appellant and also of its group entities and not only for the year under consideration but for all the relevant assessments as referred hereinabove. The nature of addition made by the ld. Assessing Officer against the assessee on account of unaccounted cash sales which is in the nature of business income and not in the nature of income from other sources. However, the amount of addition made by the ld. Assessing Officer is itself highly debatable and is unlike to be confirmed and the assessee is hopeful of complete deletion in the appellate proceedings as the said addition is completely based on pure guess-work, conjectures surmises and without finding any underlying undisclosed asset against the assessee. Where the assessee was found to be the owner of undisclosed money the ld. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en placed on judgments delivered by the Pune Bench of Tribunal in the case of Dhariwal Industries Limited v/s CIT (ITA No.1108 to 1113/PUN/2014), Lucknow Bench in the case of Mehtab Alam v/s ACIT (ITA Nos.288 to 294/Lkw/2014), Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy v/s ACIT (ITA No.766/Hyd/2012) and one of the judgment passed by the High Court of Judicature at Allahabad in the case of CIT v/s Dr. Ashok Kumar (ITA No.192 of 2000) and Hyderabad Bench of Tribunal in the case of M/s Trinity Infra Ventures Limited v/s DCIT (ITA No.584/H/2015) and consistently held that once the order under Section 143(3) r/w section 153A of the Act has been passed after taking prior approval of the ACIT under Section 153D of the Act, then the jurisdiction under Section 263 of the Act cannot be invoked. Therefore, the view taken by the Co-ordinate Bench of the Appellate Tribunal had attained finality. Hence, the ITAT, Indore has not committed any error of law by following the same view. 08. Even otherwise, as per Section 263 of the Act, the Principal Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isition, it is specifically mentioned that no order of assessment or re-assessment shall be passed by an Assessing Officer below the rank of JCIT except with the prior approval of the Joint Commissioner. Before us, the ld. Counsel for the assessee stated that for the search assessment cases whatever seized material are found belonging/pertaining to the assessee, a copy of complete set is also kept with the authority who has to provide the approval of the assessment or re-assessment. He also stated that during the course of assessment proceedings, the ld. Assessing Officer has to update about the proceedings to his senior who has to finally grant the approval u/s 153D of the Act. Even after preparation of the draft assessment order, the same is sent to the ld. Joint Commissioner and he/she after thorough examination of the seized material vis- -vis the draft assessment order prepared by the ld. Assessing Officer and after being satisfied with the correctness of such draft assessment order or in case required can suggest certain changes in the said assessment order finally grants approval. Only after receiving such approval u/s 153D of the Act, the ld. Assessing Officer passes the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion relied upon by the Ld. D.R. would not apply to this case. Further the Judgment in the case of Param Transport (P.) Ltd. (supra), of Hon'ble Chhattisgarh High Court (supra) is not with regard to approval obtained under section 153D of the I.T. Act because in this case it was held that revisional power under section 263 of the I.T. Act is applicable to assessments under search and seizure. However, it is not explained by the Ld. D.R. whether in this case the approval under section 153D have been revised by the Learned PCIT. It may also be noted that it is well settled Law that if two views are possible, then the view which is in favour of the assessee should be made applicable. We rely upon Judgment of Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. R9731 88 ITR 192. It may also be noted here that the Hon'ble Allahabad High Court is one of the jurisdictional High Court of Delhi Bench, therefore, preference shall have to be given to the Judgment of the Hon'ble Allahabad High Court as reproduced above. In the totality of the facts and circumstances of the case and following the decisions referred to above, we are of the view that the Learned PCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT is not justified in assuming jurisdiction u/s. 263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl. CIT u/s. 153D cannot be subject to revision u/s. 263 of the I.T. Act. iv. Trinity Infraventures Ltd. v. Dy. CIT [IT Appeal Nos. 584-589 (Hyd.) of 2015, dated 4-12-2015] 5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153D of the I.T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C. 3, Hyderabad in ITA No. 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of MehtabAlam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. Thus while invoking provisions of section 263 in the instant case, the rules of consistency has been given a complete bypass which is impermissible. Reliance is placed upon: Hon ble Supreme Court in Radha Soami Satsang v. CIT (1991) 11 TMI 2 has observed: We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no change, it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has specifically held that the income being added by him towards unaccounted cash sales is being added as business income. If the income has been consciously added as business income, then there is no scope for invoking the same as income from other source and in turn invoke provisions of section 115BBE of the Act. 23. That it is trite that the exercise of power u/s. 263 of the Act is ousted in case of a debatable issue. An assessment order can be termed as erroneous and prejudicial to the interest of the Revenue, if the Assessing Officer has taken a view which is not legally tenable. Per contra, if two views are available on a particular issue and the ld. Assessing Officer adopts one of such views, the case goes outside the purview of revisional power exercisable by the ld. Principal Commissioner of Income-tax u/s. 263 of the Act. Proceedings u/s. 263 cannot be sustained where the ld. Principal Commissioner of Income-tax holds a view which was different from that of the ld. Assessing Officer. Section 263 of the Act does not visualize a case of substitution of the judgment of the Revisional Commissioner for that of ld. Assessing Officer unless the decision of the ld. Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. The ld. Assessing Officer has examined that issue as it is evident from the queries posed and replies filed by the assessee appellant. Since, in this case ld. Assessing Officer has clearly conducted the enquiry and revenue did not pin point the error on the part of the ld. Assessing Officer to that extent, the assessment order passed after due application of mind cannot be subjected to proceeding u/s. 263 of the Act. 27. The ld. Assessing Officer while framing the assessment has taken a possible view and the show cause notice u/s. 263 does not demonstrate the error remained on the part of the ld. Assessing Officer. In fact, when the ld. Assessing Officer has conducted the required enquiry and not violated any of the conditions mentioned for revision of order as required by Explanation 2 of Section 263 of the Act, the order passed by the ld. Assessing Officer could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue. It is important to highlight that prior to passing of the assessment order the ld. Assessing Officer had taken approval of the ld. Additional Commissioner of Income-tax, Central Range, Udaipur. 28. The assessee also wishes to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression substantial question of law is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. See MADAN LAL VERSUS GOPI (MST.) ANR [1980 (8) TMI 204 - SUPREME COURT], WB. ELECTRICITY REGULATORY COMMISSION [2002 (10) TMI 772 - SUPREME COURT] and METROARK LTD. [2004 (1) TMI 397 - SUPREME COURT] Thus in the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he surrendered amount u/s 68 of credit entry and u/s 69 of excess stock - appellant contended that surrendered amount represents the business income as the appellant has no other source of income. Whether deeming provisions of Section 68 can be invoked in respect of amount introduced in the capital account of the assessee and found credited during the course of survey in the books of accounts of the assessee? - HELD THAT:- The Survey team had asked a specific question to the assessee during the course of survey to explain the source of capital introduced during the financial year 2018-19 relevant to assessment year 2019-20 and in response, the assessee had stated that he was unable to explain the source of capital introduced during the during the financial year 201819 relevant to assessment year 2019-20, however, in order to buy piece of mind, he voluntarily surrendered the sum - Therefore, during the course of survey, the assessee has failed to offer any explanation regarding the source of such capital introduced in his capital account. Even during the course of assessment and appellate proceeding, we find that no explanation is forthcoming from the assessee. We therefore find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal proceeding that the said income is not connected with the business income of the assessee or accumulated from non-recognising source. Hence, when all the incomes earned by the assessee are only from the business income of the assessee, there do not arise any question as to application of provisions of section 69A and hence taxing such income at special rate as per section 115BBE is improper. It is a settled principle in law that when there is no other/separate source of income identified during the course of survey or during the course of assessment proceedings, any income arising to the assessee shall be treated to be out of the normal business of the assessee only. During survey proceeding the assessee filed surrendered letter and in statement assessee also recorded and income was surrendered. We respectfully relied on the order of Sh. Harish Sharma M/s. Sham Jewellers [2021 (5) TMI 482 - ITAT CHANDIGARH] and case of Daulatram Rawatmull [1966 (4) TMI 73 - CALCUTTA HIGH COURT]. In considered view, the conversion of business income into other income and application of section 69A is bad and illegal. Accordingly, levy of tax u/s 115BBE on the income amount liable to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of accounts, the same has to be brought to tax under the head business income . Thus the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 and 69A of the Act and the same has been rightly offered to tax under the head business income . In absence of deeming provisions, the question of application of section 115BBE doesn t arise for consideration. Decided in favour of assessee . Hon ble ITAT Chandigarh Bench in Ravinder Kumar Bansal v. PCIT (2023) 12 TMI 716 has held: Revision u/s 263 - course of survey proceedings at the assessee s business premises, certain discrepancy were observed and confronted to the assessee and in response, the assessee offered a sum towards unexplained misc. advances - CIT stated that the assessee in his return of income has disclosed the surrendered income in the profit/loss account and paid taxes at the rates applicable to normal business income which need to be taxed u/s 115BBE making assessment erroneous so far as prejudicial to the interest of the Revenue - HELD THAT:- Assessee has been asked specific questions not just regarding the discrepancy found during the course of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus comes under the purview of section 68 or not - HELD THAT:- Additional income was in the nature of business income and don t fall under Sec. 68 and/or Sec. 69 of the Act and consequently therefore, Sec.115BBE could not have been invoked. In view of the above discussion, therefore, we are of the considered view that the CIT was not at all justified by invoking the provisions of Sec. 263 by wrongly/incorrectly holding that the subjected assessment order u/s 143(3) dated 25.02.2019, was passed without considering that the income declared under the head of other sources being recovery of cash amount of advances paid for purchase, comes under preview of S. 68 and 69 and thus, the tax u/s 115BBE was to be paid, as against the tax at normal rates. The assumption of jurisdiction u/s 263 was contrary to the law and facts on record. Hence, the proceedings initiated u/s 263 of the Act and the impugned order are hereby quashed. Thus, ground of appeal decided in favour of assess and against the revenue. Hon ble ITAT Rajkot Bench in Vaidya Realities v. PCIT (2024) 1 TMI 970 has held: Revision u/s 263 - income surrendered during survey operation was not verified in pursuance to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the same cannot be treated as deemed income u/s 69 of the Act. Once the income goes out of the preview of the deeming provision, the provision of section 115BBE of the Act, cannot be applied. We note that the AO has taken one of the impossible view by treating the income offered during survey operation as income under the head business and profession. The Ld. PCIT cannot substitute the view taken by the AO as per his understanding of facts of the case - Decided in favour of assessee. We thus humbly submits that the impugned order dated 22.03.2024 passed by the ld. PCIT is completely illegal, devoid of any merits, passed with predetermined motive, on the basis of assumption and presumption, ignoring the correct factual position, on wrong understanding of statutory provision, is bad in law and therefore the same is deserves to be quashed set-aside. 11. To support the contention so raised in the written submission reliance was placed on the following evidence / records : Index Sno. Particulars Pages 1 Copy of Show Cause Notice dated 12.03.2024 issued by the Principal Commissioner of Income-tax u/s. 263 of the Act 01-02 2 Copy of Reply dated 16.03.2024 submitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the written submission so filed vehemently argued that the only issue in the present appeal is the chargeability of rate of tax on the addition so made. Ld. PCIT did not find error or prejudiced with the quantum and the manner the assessment proceeding is carried out by the ld. AO and thereby ld. PCIT initiated the proceeding just to amend the rate of tax to be charged. The ld. AR of the assessee submit that when the order passed by the ld. AO is perfectly dealing with the issue and there is no error or prejudice as such ld. PCIT cannot invoke the provision of section 263 just to say different rate of levy of the tax when ld. AO was already aware about the matter. Ld. AR of the assessee vehemently argued that in the present case the fact is similar to the fact of the case that has been decided by our High Court in the case of PCIT Vs. Manna Trust (2022) [1 TMI 693 ] in that case the High Court has held that We are broadly in agreement with the view of the Tribunal. It is well settled through a series of judgments that power under section 263 of the Act can be exercised only when twin conditions of the order of assessing officer being erroneous and prejudicial to the interest of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive home to the contention ld. AR of the assessee relied upon the decision of M. P. High Court in the case of PCIT Vs. Prakhar Developers P. Ltd., [4 TMI 498 ] wherein the Hon ble High Court has held that once order has been passed taking prior approval then again invoking the provision of section 263 was not correct. Similar view was taken by Patna High Court in Gyan Infrabuild P. Ltd. Vs. PCIT [5 TMI 732 ]. Ld. PCIT on the same very issue out of other year selected only for two year and other order on the same very could not found the order erroneous and has not proposed any action when the nature of addition being same. AO has already invoked the provision of section 11BBE for A. Y. 2020-21 while dealing with the addition and while making cash sales addition he has taken a conscious decision not to invoke that provision. Even the view and the addition being debatable and the matter was under dispute before ld. CIT(A) and therefore, ld. PCIT should not considered merely on the charge of rate of tax order as prejudicial and that too without proving that it was in fact erroneous or prejudicial to the interest of the revenue. In the search no corresponding assets was found and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 143(3) r.w.s. 153A of the Act. While proceeding for assessment as we note from the order of the assessment that ld. AO noted that during search operation mobile [iphone] phone was taken in custody and some business related charts were identified in the mobile phone of Shri Jitendra Sadhwani. Print out of total 28 pages of WhatsApp chats of plywood products to various parties by M/s. Sadhwani Wood Products Private Limited. Some payments were in cheque, some partly in cash and parlty in cheque and some payments were received in cash only. These transactions were asked to be verified to Shri Jitendra Sadhwani with supporting documents. In reply there to he confirmed that all screenshots of charts impounded as exhibit-2 was belongs to his personal mobile data and all transaction reflecting in charts were related to his company M/s. Sadhwani Wood Products Private Limited. Further some of these transactions were done in both cash and banking channel. It was noticed by the ld. AO that the part transaction / sales was entered into the books of accounts remaining part where cash components involved is not entered in the books of accounts. Hence it was observed that assessee is ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the evidences, gathered at the time of search / survey proceedings as well as during the post search investigation it has established that the assessee concern is engaged in making unaccounted cash sales which come to Rs. 141,80,82,030/- the year wise bifurcation determined by the ld. AO and the related unaccounted cash sales considered for the year under consideration was at Rs. 22,40,32,276/-, which was added in the total income of the assessee as unaccounted cash sales. Ld. AO also made an disallowance of Rs. 9,41,075/- u/s. 40A(3) of the Act. Both these additions were disputed by the assessee in the first appeal and the same is pending as per the statement made at Bar. 16. In the meanwhile, ld. PCIT while examining the assessment recorded in the proceeding u/s. 263 of the Act noted that as per concluding remark in para 5 of assessment order on page 163 to 184 the assessee accepted out of books sales to the tune of Rs. 22,40,32,276/- which was added based on the seized material. As the said sales was not disclosed in the regular return of income, the then AO has made an addition of Rs. 22,40,32,276/- on account of out of book sales. This out of books sales generated ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted addition. As we note that the addition has been made by making the extrapolation and no clear finding on facts of undisclosed amount. As there is no clear material which is to be charged at special rate merely the inference about the sales based on the those seized record taking weighted average will not suggest that the amount as unexplained money. To decide on that view of the ld. PCIT let us examine the provision of section 69A of the Act which reads as under; Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account , if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 19. Here we note it is not the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the ld. AO being under disputed and while making the addition the ld. AO has not discussed or referred the section 69A of the Act the ld. PCIT cannot hold here view when that of the view of the ld. AO when the ld. AO has consciously added the said sum as business income. Thus, Explanation 2 cannot be used for such a manner that if the view taken which is otherwise a plausible view, law does not permit to invoke the provisions of section 263 of the Act without proving that order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue, as we note that there is no dispute about the quantum of addition made by PCIT. We also note that ld. AO made the addition after giving a specific show-cause notice to the assessee wherein the ld. AO based on the seized material extrapolated the income on weighted average and considered the cash sales. Thus, it was not the case of revenue for undisclosed income apparen and evident. The assessee challenged that addition before the ld. CIT(A) and therefore, the matter is under dispute. On that disputed addition ld. CIT(A) intend to levy the rate of addition for section 68, 69, 69A,B, C D of the Act. When the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conscious decision not to invoke that provision. Even the view and the addition being debatable and the matter was under dispute before ld. CIT(A) ld. PCIT should not considered merely on the charge of rate of tax order as prejudicial and that too without proving that it was in fact erroneous or prejudicial to the interest of the revenue. In the search no corresponding assets was found and the addition was made merely on slip found to be recorded in the iphone and the working of sales made based on the weighted average. Ld. AO consciously not invoked the deemed provision and not charged the income under the other income head and has added cash sales. Thus, considering the discussion so recorded herein above we do not agree with the view advanced and discussed in the order of the ld. PCIT as the order has been passed without proving that order of the ld. AO is erroneous and prejudicial to the interest of revenue and therefore we see not reasons to sustain the same. Based on these observations ground no. 1 to 3 raised by the assessee are allowed. 22. Ground no. 4 raised by the assessee being general in nature and does not require our adjudication. Ergo, we quash the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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